Excerpts from the Q...
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Interest expense increased by approximately $1,316,000 to $1,392,000 during the first quarter of 1999. Non-cash charges totaling $894,000 were recorded for financing costs related to the company's convertible debentures outstanding during the current quarter. The Company capitalized $548,000 of these financing costs to its oil and gas and refinery projects during the current quarter compared to approximately $1,620,000 of interest capitalized in the first quarter of 1998.
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Liquidity and Capital Resources
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During the first quarter ended March 31, 1999, the Company used a net amount of approximately $5,260,000 for operations, which reflects approximately $1,012,000 in non-cash provisions, including $444,000 in loan costs, issuance of stock in lieu of cash payments of $236,000 and depreciation and amortization of $332,000. Approximately $20,000 was used during the period to increase product and feedstock inventory and $3,000,000 was used to decrease accounts payable and accrued liabilities and to increase current assets other than cash. Additional uses of funds during the quarter included additions to oil and gas properties and Refinery property and equipment of $855,000 and $673,000, respectively. Cash for operations was provided, in part, by proceeds from long and short-term debt of approximately $12,215,000, partially offset by cash used to repay long-term debt of $5,300,000.
In January and February 1999, the Company borrowed an aggregate of $11.8 million, $10 million of which is outstanding convertible debt due and payable in February 2004. A portion of the proceeds was used to reduce $3.5 million principal balance from the Company's outstanding 14% convertible debentures and a significant amount of current liabilities, including $1.3 million in excise tax and related interest due to the IRS, discussed below, and an aggregate of approximately $3 million in accounts payable at the Refinery and in Kazakstan.
Since December 1998, the Company has also arranged for an aggregate of almost $5 million in non-equity financing, secured by its accounts receivable, inventory, asphalt barge, and St. Marks facility, which it utilized to acquire feedstock, refurbish equipment and for other working capital needs.
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The Company is seeking high yield debt financing to supplement it's cash flow from operations during 1999. If the Company is unable to derive the necessary working capital from the Refinery, St. Marks and AIM, or from a joint venture partner in Kazakstan, to support its operations during 1999, or obtain the necessary financing to adequately supplement or provide all of its funding needs, its ability to continue operations at current levels could be materially and adversely effected. |
